Tensions highlight the importance of global trade
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Tensions highlight the importance of global trade

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Pressure is mounting for the US and China to resolve their trade row

Global trade used to be a slightly worthy topic – loved by economists and confined to the financial pages of newspapers.But recent high profile trade rows have changed all that, underlining its value and importance to us all.Looking at the news headlines, it is easy to think that trade flows are going into reverse. The continuing dispute between the US and China has seen Washington imposing tariffs on more than $360bn (£287m) of Chinese goods, while Beijing has retaliated with tariffs on more than $110bn of US products.Elsewhere, Japan and South Korea’s trade dispute is threatening the production of smartphones, computers and other electronics, while the European Union and the UK face potential disruption from a disorderly Brexit.

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South Korea and Japan’s trade dispute is threatening the production of smartphones, computers and electronics components

Yet step back from the headlines, and take the longer view, and things look different. The world traded more than $25tn in goods and services in 2018 – and that’s more than 50 times the value of the products directly affected by the US and Chinese tariffs. The growth in global trade may have slowed to 3.0% this year – the lowest since the 2009 recession – according to International Monetary Fund, but the trend is still upward The more a country trades with its neighbours, the better the state of its economy; and nations whose domestic economies are growing significantly also tend to have higher rates of growth in trade as a share of their output, argue economists.”Liberal trade policies that allow the unrestricted flow of goods and services sharpen competition, motivate innovation and breed success,” says the World Trade Organization (WTO).

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The dawn of global trade: a 3rd millennium BC relief of Ur-Nanshe, king of Lagash in Mesopotamia

And trade has existed as long as we humans have formed civilised societies. In the 3rd millennium BC, the Sumerian city states in Mesopotamia (now Iraq) traded with the Harappan civilization of the Indus Valley (present-day Pakistan, parts of India and Afghanistan).By the 2nd millennium BC, Bronze Age Greece, Egypt, Babylon and the Hittite empire (now Turkey) regularly traded with each other – and with distant Afghanistan, where the semi-precious stone, lapis lazuli, was highly prized for its intense blue colour and used in jewellery. It was a trade that came to a spectacular end when their interconnected civilisations came crashing down around 1150BC – perhaps the first example we know of a “global” economic collapse.

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The blue lapis lazuli in the funeral mask of Egyptian pharaoh Tutankhamun (circa 1334-1325BC) is likely to have come from Afghanistan

Today the sheer variety of global trade can be astounding. For example, take cut flower exports from countries like Peru and Kenya. These have soared thanks to the growth of air travel, and the trade is now worth more than $16bn a year – that’s a lot of bouquets.Or take the humble bicycle; in the UK 50 years ago most were produced in one city – Nottingham. Today the industry is worth $45bn worldwide, and relies on an integrated global supply chain with “rims from Bulgaria, titanium from China, metal from Taiwan, hub gears from America”, says Will Butler-Adams of the UK’s Brompton Bikes firm.

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